According to Reuters on July 1st local time, French antitrust regulators will file charges against Nvidia, becoming the world's first law enforcement agency to take such action against Nvidia.
On July 1st, NVIDIA's stock price rebounded after falling 3.8% and closed at $124.3 per share, a slight increase of 0.62% from the previous day.
The accusations from France are another move following last year's raid on Nvidia's office. Last September, the French Competition Authority announced a raid on the office of a company suspected of engaging in anti competitive behavior, without disclosing the specific company name, only stating that it belongs to the graphics card industry. Later, media reports claimed that the company was chip manufacturer Nvidia.
In a document released in February this year, Nvidia stated that "our position in the artificial intelligence related market has attracted global regulatory attention to our business." These regulatory agencies include the United States, the European Union, France, China, and the United Kingdom, which require Nvidia to provide information about its graphics cards.
The report states that the European Commission has been informally gathering opinions on whether Nvidia has violated its antitrust rules, but has not yet launched a formal investigation into its anti competitive behavior. According to insiders, given that French authorities are investigating Nvidia, it is unlikely that the EU will expand its preliminary review at the moment. In the United States, where Nvidia's headquarters are located, media reported last month that the Department of Justice is leading an investigation into whether Nvidia has violated antitrust laws.
Nvidia is the world's largest AI chip manufacturer, occupying over 80% of the market share with its powerful GPU chips. Driven by the AI craze, Nvidia's market value has skyrocketed, surpassing Apple and Microsoft to become the world's number one company. Meanwhile, Nvidia is facing an increasingly tight global regulatory environment.
Last November, French Finance Minister Bruno Le Maire stated that Nvidia's dominant position had led to increased inequality among countries, stifled fair competition, and emphasized that only one company could sell all equipment. In a report released last week on competition in generative artificial intelligence, French regulatory authorities also expressed concerns about the AI industry's reliance on Nvidia CUDA software. This software system has built a solid moat for Nvidia's hardware products.
If Nvidia violates French antitrust laws, it will face a fine of up to 10% of its global annual income. The French Competition Authority imposed a penalty of 1.1 billion euros on Apple in 2020 for violating competition rules, the highest penalty in the agency's history.
As the AI wave sweeps across the world, highly profitable companies have also begun to enter the sight of regulatory agencies, including major technology companies in addition to NVIDIA, which sells AI shovels.
On June 28th, senior EU officials stated that they are increasing scrutiny of the AI industry. The EU antitrust regulatory authorities are further examining the partnership between Microsoft and OpenAI to determine whether certain exclusivity clauses will have a negative impact on competitors, such as whether OpenAI exclusively uses Microsoft Azure cloud services. In the previous investigation, the EU made it clear that although Microsoft invested 13 billion dollars in OpenAI and is its largest investor, it has not yet gained control of OpenAI.
At the same time, the European Union also questioned the market about the agreement between Google and Samsung, to understand the impact of Google pre installing the small model Gemini Nano on some Samsung devices. Some "acquisition hiring" behaviors have also received attention from the European Union, where large technology companies achieve their acquisition intentions by recruiting talent, such as Microsoft hiring most employees of AI startups and OpenAI competitor Inflection AI, including its co founders.
"If these practices ultimately lead to concentration of businesses, we will ensure that they do not evade our merger control rules," said Margrethe Vestager, Commissioner for Competition at the European Commission, last week.